CHAPTER 10

INITIATIVES TO IMPROVE BUSINESS ETHICS

AND REDUCE CORRUPTION

INTRODUCTION

Improvement of business ethics is a common concern of everybody. It is imperative that all parties
involved – manufacturers, sellers, consumers, government and relevant organizations must participate
in improving business ethics. Unless there is a concerted effort on the part of everybody, we cannot
effectively remind businessmen and professional of their ethical responsibility to each other, to their
customers and clients.

Unethical practices are ever present. Even people who have not yet been victims of these practices are
vaguely aware that they exist and agree that something must be done to rid the world of them.
Accordingly, various approaches to improving business ethics have been brought forward not only in the
Philippines but also in other countries.

THE INTEGRITY INITIATIVE CAMPAIGN

In 2010, a private sector-led campaign aiming to strengthen ethical standards in business, the Integrity
Initiative was organized after the Philippines received a grant from Siemens. The Makati Business Club
(MBC) and the European Chamber of Commerce of the Philippines (ECCP) serve as the Integrity Initiative
Secretariat.

The Integrity Initiative is a multisectoral campaign that seeks to institutionalize integrity standards
among various sectors of society – business, government, judiciary, academe, youth, civil society,
church and media. Led by the private sector, the initiative aims to help in diminishing, if not fully
eradicating, the vicious cycle of corruption in the Philippines, which has not only exacerbated poverty
but also obstructed the development of a competitive business environment that operates on a level
playing field.

Ultimately, the Integrity Initiative hopes to build trust in government, a more equitable society and fair
market conditions. This will result in improved competitiveness and increased business confidence,
which will evident with the increase in domestic and foreign investments, and more employment
generated for Filipinos. Subsequently, with more Filipinos employed in a vibrant and dynamic Philippine
economy, the alleviation of poverty should become inevitability. Through the initiative, the Philippines
will become a benchmark in the transformation process of any country regarded as highly corrupt to
one that fosters an ethical and progressive business environment.

To achieve this goal, consultations, roundtable discussions and public forms involving business leader
compliance officers, corporate governance experts, academics and practitioners from small and medium
enterprises to Fortune 500 companies. “An Integrity Compliance Handbook” containing the key
documents and toolkits in Integrity was published for the use of organizations to promote ethical
business practices.

Since 2010, MBC and ECCP have been joined by various organizations and industry associations in taking
an active role in promoting honesty and transparency in Philippine business. As of 2018, a number of the
organizations and industry associations have been taking active participation in this movement.

With the active participation of these organizations, is hoped that the problem of massive graft and
corruption in the Philippines will be minimized if not totally eliminated.

Appendix G shows a partial list of organizations who are actively participating in the “Integrity Initiative”
Campaign against Corruption.

Corporate Values

The increasing scrutiny by regulators, lobbyists, non-government organizations, consumer groups and
the media have the potential to affect a business firm market perception and hence value. It is therefore
important that the organization’s values, and its code of conduct, address the legal and other obligations
owed to important stakeholders, including, for example, trade practices laws, employment laws,
occupational health and safety, equal opportunity in the workplace, superannuation and environmental
regulations.

Managing, protecting and enhancing reputation has become one of the greatest challenges facing
today’s board. The reputation of a business is a critical factor in the determination of its value. The
values and ethics of the organization need to be explicitly managed.

Need for a Code of Conduct

A code of conduct is a formal expression of the organization’s values and ethics. A code of conduct
should:

 Guide directors and senior executives, as a minimum, as to the practices necessary to maintain
confidence in the organization’s integrity. Other members of staff should also have a code of
 conduct relevant to them which may be the same as that for directors and senior executives or
may be a complementary version;
 Promote responsibility and accountability of individuals for reporting and investigating reports
of unethical practices; and
 Ensure compliance with legal and other obligation to legitimate stakeholders.
An organization’s code of conduct recognizes the important role that business ethic play in the success
of today’s business, encouraging the board to actively develop an organizational culture that is
established on transparency, accountability and integrity.

One of the most significant accomplishments of the Integrity Initiative is the preparation of the “Unified
Code of Conduct for Business”. The Code’s purpose is two-fold.

First, it harmonizes existing ethical standards among business operating in the Philippines. It
ensures that different market players adhere to the same rules of the game in order to create fair
market conditions and promote transparency in doing business.

Second, the Code formally communicates the signatories’ commitment to upholding high
standards of ethics in all business transactions. It articulates the belief that securing profit at the
expense of integrity is an unacceptable and unsustainable way of conducting business and that
measures must have been taken to enforce and cultivate integrity habits within the signatories’
respective organizations.

THE UNIFIED CODE OF CONDUCT FOR BUSINESS (Integrity Initiative)

Top Management

 Our top management leads by example by consistently demonstrating the value of conducting
business with integrity.
 Our officers strongly communicate our organization’s position against bribery, corruption and
unethical business practices within the company and the broader public; comply with all the
requirements of government regulatory bodies; and prohibit cover-ups and falsified reports that
conceal improper transactions.
 Management strongly supports integrity practices and allocates sufficient resources for their
implementation.

Human Resources

 We strive to instill culture of integrity among our employees. The management maintains open
lines of communication with employees, particularly on matters relating to honesty,
transparency and integrity in business transactions.
  In the spirit of fairness and due process, all employees have the right to file and respond to
complaints against practices suspected to be illegal or unethical.
 We have appropriate tools to confidentially receive, monitors, and act on internal and external
complaints.
 Employees filing complaints will be protected from all types of retaliation, while those involved
in unethical practices will be subject to commensurate disciplinary actions.
 We have instituted training programs on business ethics covering all levels of the organization.

Sales and Marketing

 We clearly communicate rules and guidelines on giving gifts, entertainment, tokens of

hospitality, and contributions to/from public and private organizations and their
representatives.
 Employees and all third parties engaged by our company to act as our intermediaries, agents or
representatives are not permitted to offer, promise, or give, as well as demand or accept
concessions – directly or indirectly – in order to obtain, retain, or secure any advantage in the
conduct of business.
 We abide by existing laws when transacting with government agencies (as stipulated under RA
6713 – Code of Conduct and Ethical Standards for Public Officials and Employees and RA 3019 –
Anti Graft and Corruption Practices Act).

Finance and Accounting

 We require all our employees to ensure that all books and records they create or are
responsible for are complete and accurate.
 Our financial records conform to standard accounting principles, comply with Securities and
Exchange Commission requirements on disclosure and transparency, and abide by anti-money
laundering laws (RA 9160) and international conventions.
 We pay taxes in compliance with all laws.

Procurement

 A track record of integrity and compliance with existing laws is a prerequisite when we vet third
party consultants, suppliers, intermediaries and agents. Our company has transparent
procurement procedures, provides equal opportunities for all suppliers, and prohibits, collusion
between and among our employees and suppliers.
 Recognizing that the Integrity Initiative is sustained through widely shared ethical practices
within the business community, we enter into integrity pacts with our suppliers and ensure that
they comply with the provisions of our pact.
  Contracting a third party to bribe or commit corrupt practices on behalf of the company is
strictly prohibited.

Logistics

 We comply with laws and regulations pertaining to supply chain management.

 We do not tolerate any breaches in existing laws in exchange for undue advantage and unethical
concessions or favors. We pay correct duties and taxes based on transparent assessment of
goods and services.
 Employees are not penalized for refusing to pay bribes or facilitation payments even if it results
in failure to meet deadlines or loss, of revenue.

Implementation and Monitoring

 We will continually to align our operations to the principle contained in this Code periodically
assess and monitor our compliance to it. We will continue to share best practices with the
business community to strengthen ethical business process in the Philippines.

BISHOPS-BUSINESSMEN’S CONFERENCE PHILIPPINES – CODE OF ETHICS FOR THE PHILIPPINE BUSINESS

The Code of Ethics for the Philippine Business issued by the Bishops-Businessmen’s Conference
Philippines is reproduced in this chapter for reasons of continuing applicability, relevance and
significance to entities doing business in the Philippines.

Preamble

This Code of Ethics has been formulated impelled by the belief that man has a dignity that must be
respected, and that all the resource of the earth has been created for his growth and development.

As here presented, this Code is considered a major step in the on-going and changing process of
understanding the growing role of business activity in the development of man and, as much, is open to
further improvement.

The Code seeks to express systematically and coherently the principles of business practices accepted
and professed by Philippine business at its best, and seeks to apply these to current and changing needs.
It is the hope that this Code will serve as a general stimulus to renew and develop or amend existing
standards, and that individual entities will expand and adopt it to the specific needs of their own
organizations.

It is general Code intended to be influential rather than coercive. It is hoped that individual entities will
consciously adopt and embrace it as a statement of principles and, having done so, will be unwilling to
incur the sanction of adverse public opinion through failure to live up to the Code.

Finally, it is Code for all people, formulated on the premise that the modern manager must be a
strategist for human development, and that the business of business is to build an enterprise oriented to
the development of man.

The Concepts

Business which embraces commerce and industry is not an accidental human activity but an integral
element of the social order. Its primary purpose is to meet society’s human needs by providing goods
and services as efficiently as possible. Those engaged in business should, therefore, recognize the
following basic concepts:

 All business is essentially an expression of human relationships; not only with those who work in
the enterprise, but also with those who own and provide financial resources, with those who
supply it with materials and services, with those who buy its products or services, with the
government, and with the wider public whose lives are affected by the business activity. The
interest of all those members of society must be taken into account in formulating business
policy. These interests, in themselves legitimate, will at times conflict. While conflict and tension
can be themselves being constructive, the aim of business must always be to reconcile opposing
interests in a balance of justice and mutual concern.
 The owners, management, the work force, the suppliers and subcontractors, the customers, and
government contribute to the performance of the business enterprise, and are therefore
entitled to receive the proper worth of their contributions.
 The resources employed by a business enterprise are financial, technological and human. The
human resources have a unique quality and should be employed in a manner consistent with
personal dignity. The individual should be given opportunity to use and develop his faculties in
his work. His contribution to the success of the enterprise should be properly recognized and
rewarded.
 Business enterprise has a public responsibility to use all its resources efficiently. Profit in a
system of free enterprise is recognized as a fundamental incentive, and is necessary for the
maintenance and growth of the enterprise, for raising the quality or life, and for helping meet
the broader needs of society.
  Competition and incentive are essential for the maintenance and continuing improvement of
the quality of goods and services for growth and for technological progress. However, to guard
against unfair forms of competition, a consistent standard of business behavior must be
established and observed.
 In business, as in any other institution od society, any right or authority enjoyed by or entrusted
to business presupposes, and is justified by, corresponding duties, responsibilities and
performance.

Some Principles for the Conduct of Business

Those responsible for business policy should consider not only the interest of the owners of the
business, but also the interest of those affected by the activities of the business.

Towards the Employees

Business shall recognize the unique position of employees as individuals with a vital stake in their work
and at the same time with inherent obligations to their own families, and provide:

 For recognition that, although rates of pay may often be determined by union., economic and
legal pressures, wages and salary policy should be based on the right employees to a fair and
improving standard of living, irrespective of race, sex, age and creed;
 For fair recruitment practice that affords equal opportunity to all qualified job-seekers;
 For job security, adequate compensation for employees in cases of separation and retirement,
and opportunities for fringe benefits;
 For a safe and healthy atmosphere in the work environment conducive to the physical and
moral well-being and growth of the employees;
 For conditions in which human potentials and relationships can be developed at all levels of the
work force, with a view to providing therein a sense of purpose and achievement; and
 For participate elements so that the knowledge, experience and creativity of all who work in the
enterprise may contribute to the decision-making process.

Towards the Customers

Business shall, in the production of goods and services:

 Strive after a quality that will enable them serve their purpose efficiently and effectively;
  Avoid anything that would be detrimental to the health, safety or growth of the proper user or
beneficiary of such goods and services; and
 Seek to apply or make use of the discoveries and inventions of science with adaptations that will
improve their products or services, thereby benefiting customers / users and increasing their
number.
In this marketing arrangement, business shall:

 Driver the product or service in the quality, quantity, and time agreed upon, and at a reasonable
price, and avoid the creation of artificial shortages, price manipulation, and like practices;
 Establish an after-sales and complaints service commensurate with the kind of product or
service supplied and the price paid;
 Ensure that all mass media, promotional, and packaging communications be informative and
true, and take into account the precepts of morality and the sound cultural values of the
community, and manifest for human dignity.

Towards the Suppliers

Business shall ensure:

 That the terms of all contracts be clearly stated and unambiguous, and honored in full unless
terminated or modified by mutual consent;
 That abuse of economic power in dealing with a smaller concern be avoided, and that, in all
cases, terms of payment be strictly and fully observed. In general, payment should always be
made promptly at the agreed time or, if no specific time is agreed upon, as quickly as may be
reasonable, given the circumstances; and
 That no supplier be encouraged to commit his resources for apparently long-term purposes
unless there are reasonable guarantees that the orders, he receives from the business
enterprise will not be terminated arbitrarily.

Towards the Owners and other Providers of Capital

In the interest of the Owners and other Providers of Capital, business shall:

 Provide an adequate rate of return to those contributing capital to the enterprise and ensure
the security of their investment,
 Use their financial resources to provide goods and services responsibly and efficiently;
 Furnish the Owners and other Providers of Capital with such information as they may reasonably
require, provided that it does not adversely affect the security or efficiency of the business; and
  Pursue the specific objectives of the Owners and other Providers of Capital provided these do
not run contrary to any of the principles stated herein.

Towards the Local and National Government

Although it is the responsibility to enact legislation and formulate implementing policies and programs,
it is the duty of business;

 To participate in the discussion of proposed legislation and / or its implementation affecting

sectoral, regional, national and international interests; and
 To propose sound policies in the use of human and material resources.

Towards Society in General

Businessmen shall recognize in their decision-making the interest of the general public and, realizing
that they are utilizing to an important degree the nation’s resource, shall:

 Take regulars stock of their response to the basic needs of society and thus ensure that these
needs are taken into account in all policy-making decisions;
 Do their best to ensure that the way they deploy their resources benefits society in general and
does not conflict with the needs and reasonable aspirations of the communities in the area
where they operate;
 Pay proper regard to the environmental and social consequences of their business activity, with
special attention to the duty of renewing resources where possible and minimizing waste and
pollution, and not sacrifice safety or efficiency in the interest of short-term profitability;
 As corporation citizen make such contributions as their resources will allow, to research,
development and application of indigenous technology, and to the financing of social
development projects;
 Consider the human and social costs of mechanization and technology.
 Establish a policy allowing employees, within reasonable limits, to contribute to the public and
community services during the work time;
 Establish a policy regarding conflicts of interest based on the principle that decisions should be
made in the best interest of the business enterprise, and decision makers should be on their
guard against allowing personal consideration to distort their judgement; and
 Not tolerate any form of illegal data-gathering or any form of inducement that tends to distort
normal commercial judgement.
Survey of Laws Advocating Business Ethics

RA 7394 “The Consumer Act of the Philippines”

Approved on April 13, 1992.

RA 3720 “The Food, Drug and Cosmetics”

Approved on June 22, 1963.
RA 8293 “The Intellectual Property Code of the Philippines”
Effective January 1, 1998.

The Intellectual Property Rights Law covers

1. Copyright and Related Rights
2. Trademarks and Service Marks
3. Geographic Indications
4. Industrial Designs
5. Patents
6. Lay-out-Designs (Topographic) of Integrated Circuits
7. Protection of Under